NLRB Gives Employers Four More Reasons to Celebrate During the Holidays

Client AlertDecember 20, 2017

Last week the National Labor Relations Board (“NLRB” or the “Board”) continued to correct its course to a more even balance between union and employer interests. It overturned four controversial decisions that had created a great deal of consternation and uncertainty in the employer community.

On Thursday, the Board overturned its 2004 Lutheran Heritage Village-Livonia standard concerning employee handbook policies. Under the old rule, an employer’s facially-neutral policy was illegal if employees could “reasonably construe” it as prohibiting their exercise of their rights under the Labor Management Relations Act (LMRA). Thursday’s decision involving The Boeing Company establishes a new test that uses two criteria to evaluate policies that, when reasonably interpreted, would potentially interfere with the exercise of LMRA rights: (i) the nature and extent of the potential impact on LMRA rights, and (ii) legitimate justifications associated with the rule. From now on, there will be three categories of rules: Category 1 includes those that are lawful to maintain because they cannot be reasonably interpreted to interfere with worker’s rights or because any interference is outweighed by business interests. This effectively allows businesses to maintain rules requiring employees to maintain basic standards of civility in the workplace, overruling past decisions. Category 2 includes rules that warrant individualized scrutiny based on the two evaluation criteria. Category 3 includes rules that are unlawful because they prohibit or limit LMRA-protected conduct in a way that is not outweighed by business interests; e.g., a rule prohibiting employees from discussing wages or benefits with one another. These criteria and categories allow for greater clarity for employers in establishing handbook policies that govern their employee’s behavior, such as making recordings in the workplace and social media usage.

Also on Thursday, the Board ended two years of uncertainty for employers that stemmed from its 2015 Browning-Ferris Industries ruling, which held that two businesses are joint employers when one has even “indirect” or “reserved” control over the other’s workers. That expanded standard left employers with big questions regarding unionization and collective bargaining as between the two businesses and expanded liability for labor and employment violations such as wage and hour, safety, and discrimination. The Board’s decision in Hy-Brand Industrial Contractors and Brandt Construction Co. returned to the 1985 standard under which two or more entities will be deemed joint employers if there is proof that one has direct and immediate control over the essential employment terms of another entity’s employees and actually exercised that control in a manner that is not limited and routine. Interestingly, the Board ruled that the two construction companies involved in this case were joint employers and therefore jointly and severally liable for unlawful discharges of seven striking employees. The Board noted that the corporate secretary served both companies and was directly involved in the decision and was the primary hiring decisionmaker, the employees of both companies participated in the same 401(k) and benefit plans, were covered by the same workers’ compensation policy, and attended the same training sessions. This ruling effectuates the changes pursued in recent legislative efforts and promotes stability and predictability in bargaining relationships.

When a union seeks to represent a group of employees, the LMRA requires the Board to decide whether that group constitutes a unit that is “appropriate” for collective bargaining. In 2011, the Board opened the door to certification of so-called “microunits” in its Specialty Healthcare decision. These were units of only a few employees within a larger facility, where the employees were linked together primarily by their interest in becoming unionized. Originally billed by the Democrat Board members as intended to apply only in rare circumstances, the microunit concept grew more and more common. Under that standard, units comprised of retail employees in a part of a department on one floor of a multifloor department store were approved. Employers could fend off such piecemeal organizing and subsequent collective bargaining only by demonstrating that other employees outside of the petitioned-for unit shared an “overwhelming” community of interest with the petitioned-for unit. This standard was uncertain of application and, in practice, created an overwhelming barrier for employers to establish the existence of a broader unit.

In PCC Structurals, Inc., decided on Friday, the Board reviewed a Decision and Direction of Election that found that a unit of 100 welders in a plant with over 2500 production workers was appropriate for collective bargaining. Without deciding the issue of whether the petitioned-for unit was appropriate, the Board remanded the case for a decision under the longstanding community of interest standard, which permits the Board to evaluate the interests of all employees, both within and outside the petitioned-for unit, that had been applied by the Board for decades before 2011. It rejected the need for employers to prove an overwhelming community of interest, thus restoring predictability to the area of unit determinations.

In another collective-bargaining related decision, the Board on Friday clarified employers’ duty to bargain over “changes” in employment matters that are consistent with past practice. In 2016, the Obama Board found in the Du Pont case that an employer was required to provide notice and an opportunity to bargain with a union representing its employees for any change in terms and conditions of employment after a contract that contained a management rights clause had expired or before it had been negotiated. This was the case even if the employer had repeatedly taken such actions as a matter of course. Now, in Raytheon, the Board overruled Du Pont and found that an employer can make normal changes without going through notice and bargaining. In Raytheon, the employer was confronted with the need to renew its health plan for 2013, as it had done every year at the same time from 2001 through 2012. It did so and received a charge, which was upheld by an Administrative Law Judge. The Board, by a 3-2 margin, found that this type of change, even if an element of discretion existed, was not the type of change over which advanced notice to the union and bargaining was required.

Chairman Miscimarra made a focused and deliberate effort to target recent controversial decisions, and his efforts are made clear in these significant pro-business reversals. His term on the Board ended after these decisions were issued. The Board now stands with a 2-2 Democrat-Republican split and until a new member is appointed by the current administration and takes office, it is unlikely that the Board will issue any further significant changes. In the meantime, employers should tip their caps to the final days of Chairman Miscimarra’s term.